Buyers Hoping Santa Lowers Mortgage Rates
Typical seasonal slowdown adds to current market malaise.
The number of active and available homes for sale throughout the Greater Sacramento Region declined by 15 percent during the month of November. Lethargic buyer demand however, has weakened the inspiration of other potential sellers. New listings posted over the past three months fell a notable 26 percent short when compared to the same period last year. Consequently, the market still remains in a modern day “state of balance” with approximately 2.5 months of supply based upon the current rate of sales. Historically speaking, four to six months has typically been viewed as the “balanced market” range.
A total of 1,300 resale homes went under contract as new pending sales, while 1,268 were posted as sold and closed across the entire region for the month of November. These sales categories reflected 9 percent and 17 percent drops respectively compared to October, which is not unusual for the season. Compared to last year though, these metrics have literally fallen off the proverbial cliff due to the huge jump in mortgage interest rates. A more relevant comparison may be the fact that new sales and closed escrows track 40 to 45 percent lower than those in pre-pandemic, November of 2018 and 2019.
According to Pat Shea, president and CEO of Lyon Real Estate, “the typical seasonal slowdown in sales has further exacerbated the rate-influenced market malaise. We experienced a once-in-a-lifetime market boom and now we are paying the piper.”
The average closed sales price rested at $611,000 and median sales price at $550,000 for the region in November. Both metrics have swiftly retreated from their record-setting highs of $714,000 and $625,000 reached in May. “What goes up must come down,” says Shea. The shock to our market system however, is the extreme velocity at which these fluctuations have occurred.
“Currently the only homeowners who might be feeling a little bit of financial pain are those who purchased over the past 18 months,” Shea adds. “Yet most homeowners stay in their property at least seven years. This market will surely stabilize and get back on an upward trend. The only question is when. Some experts are projecting 2023 and others 2024. Even with another modest bump in short-term rates by the Fed, we are seeing downward pressure on mortgage rates. The housing market will sort itself out and it may be as early as this spring.”
This market information was presented by Lyon Real Estate based upon data provided by Trendgraphix Inc., a Sacramento-based reporting company.
About Lyon Real Estate
Lyon Real Estate is the leading independent real estate brokerage company in Greater Sacramento (Sacramento Business Journal), and is proud to be homegrown, privately owned, and internationally known. Lyon has served the area for over 75 years. Last year, the company closed a total of 5,851 transactions and $2.86 billion in sales volume. Lyon Real Estate has over 800 agents in 17 offices located throughout the region. The company is a member of the Leading Real Estate Companies of the World®, the largest network of premier locally branded firms, as well as LeadingRE’s Luxury Portfolio International® program. In addition to its real estate services, Lyon Real Estate offers RELO Direct, a global relocation program. Since 2015, the Lyon Cares Foundation has contributed more than $1,017,000 to local nonprofits. For more information about Lyon Real Estate, click to GoLyon.com.
About TrendGraphix, Inc.
TrendGraphix, Inc. is a real estate reporting company based in Sacramento that uses local Multiple Listing Service (MLS) data to provide highly-visual market statistical graphs to real estate brokers, agents, and MLS/Realtor associations across the country. TrendGraphix’s programs are currently used by tens of thousands of agents in more than 250 brokerages in 48 states. For more information about TrendGraphix, visit www.trendgraphix.com.